The Conference Board's Consumer Confidence Index, which has fallen in the past three months, declined again in September.
The Index now stands at 93.3, down from 94.5 in August. The Consumer Confidence Survey is based on a representative sampling of 5,000 U.S. households.
"Confidence is taking a beating from rising unemployment, the threat of war, a sinking stock market and the new concern that reports about business cannot be trusted", said Jim Haughey, Newport Communications' senior economist. Haughey noted that the drop in confidence has stalled sales at retail stores but has not stopped consumers from boosting spending on cars, homes and new mortgages. "These three items are so strong that total consumer spending is growing at an above average 4-5% pace this quarter."
According to the Conference Board, consumer assessment of the present situation was mixed. Those rating business conditions as "good" increased from 16.7% to 18.2%. However, those rating conditions as "bad" also increased, from 21.8% to 23.3%. Consumers reporting jobs were plentiful declined to 15.9%, down from 17.4%. Those claiming jobs are hard to get climbed to 25.5%, up from 23.8% last month.
Overall, consumers were more optimistic about the short-term outlook. Fewer respondents expect an improvement in business conditions in the next six months -- 21.5% in September, down from 22.2% in August. However, fewer consumers expect conditions to worsen -- 9.6% in September, down slightly from 10% in August.
"Weak labor market conditions continue to erode confidence," says Lynn Franco, director of the Conference Board's Consumer Research Center. "But while consumers are not as positive about current business conditions, they are more optimistic about the outlook than last month. Historically, this trend is prevalent during a recovery."
The employment outlook was more favorable in September. Those anticipating more jobs to become available in the next six months increased from 17.4% to 17.7%. As for income prospects, 20.3% of consumers anticipate an increase, down from 22.1% in August.
This news comes just as Federal Reserve Chairman Alan Greenspan and his Federal Open Market Committee colleagues meet about the federal funds rate, the interest banks charge each other on overnight loans. Economists expect Greenspan and his Federal Open Market Committee colleagues will leave the federal funds rate unchanged at 1.75%.